Why Are Big Airlines Shunning Some Travel Websites?

The ease of using a travel website to search across all carriers for the cheapest flight available may be in jeopardy. A few major airlines have begun forbidding some websites from listing their flights. Some people might think that this is odd -- why wouldn't airlines be excited about the opportunity to have their fares exposed to more consumer eyeballs by being listed on such site? The answer is a little complicated and depends on who you talk to.

Brand Recognition

Two of the big names distancing themselves from some travel website are Delta and American Airlines. Here's Charisse Jones at USA Today reporting on Delta's reason for shunning some travel sites:

"We look at it very much like an Apple Store vs. Best Buy," Glen Hauenstein, a Delta executive vice president, said in a recent presentation to investors. "You can buy components or Apple products at both, (but) your experience in an Apple Store is obviously quite different than it is at a Best Buy store."

Of course, Apple has another reason for pushing its products through its store: brand recognition. If you're looking for a new tablet in an Apple Store, you choose between iPad models, not between tablets from Apple, Sony, and Samsung. By the time you hit the Apple store, you may have already decided that you want an Apple product because you like the brand.

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Although Delta appears to be claiming that its website provides a better purchase experience than travel websites, it's more plausible that they're really looking for brand differentiation here in much the same way. Delta likely believes air travel shouldn't be treated as a commodity. For example, it probably thinks it offers a higher quality of service than a discount airline like Sprit.

This attitude isn't uncommon from companies who believe they offer customers a higher quality product than some competitors. The big airlines may be beginning to view themselves like luxury companies. And just like you don't see Gucci or Prada desperate to get on Wal-mart's shelves, these airlines might not be as interested in attracting customers merely looking for the cheapest tickets available through travel websites.

Better Transparency

But the story is more complex than that a push for greater brand recognition alone. The USA Today article also explains why Americans is no longer on Orbitz:

American, on the other hand, says that it's not interested in shrinking the number of outside outlets that sell its flights. Instead, it wants Orbitz to switch to a technology system that informs fliers about the ever-growing array of services the airline offers for a fee, such as priority boarding, which bring the airline over $1 billion a year in additional revenue.

At a time when airlines are increasingly relying on fees from a la carte extras as a source of revenue, travel search websites do oversimplify. For example, Spirit charges for carry-on and checked baggage. U.S. Air charges for only checked baggage. On Jet Blue, your carry-on and first checked bags are free. So the ticket prices that pop up on Orbitz for these three airlines may be misleading. Which ultimately provides the cheapest trip depends on more than just the fare shown.

Currently, these sites actually benefit airlines with more fees, because their ticket price appears cheaper, since it doesn't include all the additional charges, initially hidden from view. It's actually a pretty fair argument that airlines want full disclosure about fees so that consumers really know what they're getting. And of course, if the travel site has no way to provide customers with the ability to add on additional fees at the time of booking, like purchasing a premium seat instead, then this could impact airline profits.

Cutting Costs

But this isn't the only profit-related concern that airlines have about their flights appearing on travel sites. One reason not cited in that USA Today article, but almost certainly pushing airlines away from these sites, has to do with eliminating a middle man. Currently, sites like Orbitz and Expedia rely on global distribution systems to collect the information for their fare searches. Airlines pay a fee fro these services so that travel agents can access their flight pricing data.

As airlines have begun to increasingly rely on their own websites, those services are no longer as valuable as they once were, and airlines likely want to limit the fees they pay for sales through these systems. What we may begin to see here is travel searches relying less on these systems and more on simply scrubbing airline websites for flight data, which some services like Bing already do. It's likely that Google will also get into this game shortly, as its intended acquisition of travel search software ITA implies.

Really, these big airlines must realize that they're rarely going to win on price when competing with the discount airlines. So they probably are beginning to see the potential cost outweighing the benefit of listing their flights on these travel web sites. Is a sense, the burden lies with these websites to find a way to show these big airlines a tangible benefit of staying around. That likely means eliminating the middle-man systems and providing a more robust search with results that detail fees. Let's hope they do, because ultimately consumers will benefit if the big airlines continue to try to compete with the discount airlines on price.